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Phoenix Gold Delivers Mick Adams‐Kiora And Wadi Project Studies To Norton Gold Fields

Phoenix Gold (ASX: PXG) has delivered separate studies covering the Mick Adams‐Kiora and Wadi projects in Western Australia to Norton Gold Fields (ASX: NGF) under an option to mine and treat agreement.

Norton now has six months to consider mining of these projects, which form part of Phoenix's Castle Hill Stage 1 project.

Should Norton exercise its option Phoenix is not required to commit any funds and will receive half of any profits generated by the projects.

This could result in the mining of 2.33 million tonnes of ore grading 2.03 grams per tonne gold, or 142,800 ounces of recovered gold, generating revenue of $199.9 million using a gold price A$1,400 per ounce.

The Mick Adams‐Kiora and Wadi projects are located on the highly prospective Kunanalling shear zone in the heart of the Western Australian Goldfields. These are less than 50 kilometres from the regional mining centre of Kalgoorlie.

Pit designs completed in the Option Studies are similar to the year one starter pits for Mick Adams‐Kiora and Wadi and do not sterilise or impinge on future mining at Castle Hill Stage 1.

However, any mines developed under the agreement will ultimately be based on pits designed by Norton following completion of its own due diligence.

"Phoenix and Norton have always had a close working relationship with the development of the Catherwood open cut under a similar Agreement and also stockpile sales," Phoenix Gold managing director Jon Price said.

"This potential arrangement can provide significant cash flow generation for Phoenix with no up‐front capital costs and little risk.

"If Norton proceeds it will accelerate cashflow for Phoenix and still allows us to be developing several other mining projects in parallel."

Price added that even if the option was not exercised, the company was happy to develop the projects as part of its own staged development plan.

Analysis

With Phoenix Gold delivering the option studies for the Mick Adams‐Kiora and Wadi projects, the ball is now inNorton Gold Fields' court to decide on developing it.

Should it commit to its development, the two projects will be developed at no upfront capital costs and little risk to Phoenix.

This will also provide significant cash flow generation estimated to total about $17.65 million, adding to the company's development of the Castle Hill Stage 1 development, which is expected to begin in the second half of 2014.

Ore from Castle Hill will initially be treated at a third party mill in close proximity with base case gold production estimated at 40,000 ounces to 50,000 ounces.

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